The Ryan Budget Roadmap was introduced in January, and then sank like a stone. But with Ryan’s appointment to the Catfood Commission it and its author have drawn some new attention which borders on fawning. Or at least part of the plan has drawn attention, that part which would privatize Social Security and voucherize Medicare. What is getting less attention is his radical tax plan which if fully implemented would mean inheritors of great wealth would never pay federal taxes. EVER.

Instead, Ryan is running a campaign of a different sort, one his party has so far refused to adopt: He is determined to persuade colleagues to get serious about eliminating the national debt, even if it means openly broaching overhauls of Medicare and Social Security.

He speaks in apocalyptic terms, saying the debt is “completely unsustainable” and warning that “it will crash our economy.” He urges fellow politicians, and voters, to stop pretending that this problem will go away on its own.

He administers his sermons with evangelical zeal. He will go anywhere and talk to anyone who will listen. When he is not writing op-eds and appearing on television, he can often be found speaking to liberal and conservative audiences alike about his “Roadmap for America’s Future,” a plan he says would fix the problem.

So what is step one and two in cutting “completely unsustainable” debt? Well slashing Social Security and Medicare. And step three? ELIMINATE ALL TAXATION FOR BILLIONAIRES AND THEIR HEIRS. Details directly from Ryan’s website under the fold.The main page for the Roadmap is here: http://www.roadmap.republicans.budget.house.gov/ If we go to the tax reform page we get the following (bolding mine):

This plan discards a needlessly complex and manipulative tax code, replacing it with a simplified mechanism that promotes work, saving, and investment.

Provides individual income tax payers a choice of how to pay their taxes – through existing law, or through a highly simplified code that fits on a postcard with just two rates and virtually no special tax deductions, credits, or exclusions (except the health care tax credit).Simplifies tax rates to 10 percent on income up to $100,000 for joint filers, and $50,000 for single filers; and 25 percent on taxable income above these amounts. Also includes a generous standard deduction and personal exemption (totaling $39,000 for a family of four).Eliminates the alternative minimum tax [AMT].Promotes saving by eliminating taxes on interest, capital gains, and dividends; also eliminates the death tax.Replaces the corporate income tax – currently the second highest in the industrialized world – with a border-adjustable business consumption tax of 8.5 percent. This new rate is roughly half that of the rest of the industrialized world.

First thing to note is that this plan for ‘simplification’ sets up two parallel tax systems, allowing people to stay on the existing one if they like. Considering that just about everyone would get a tax cut under the new system why even have this provision in? Because Ryan can only make his revenue projections by assuming that most people will willingly stay on the old system and pay more taxes. But that headshaker pales in comparison to the implications of the text I bolded.

These provisions are billed as encouraging ‘savings’, but on inspection ‘savings’ here goes far beyond a worker’s 401k, it includes ALL investment by anyone including billionaires like Peter G Peterson and Warren Buffett. Because while you can get to be a millionaire by being paid direct compensation by your employer and even a multi-millionaire you don’t become a billionaire that way, instead billionaires get their money from a combination of dividends, asset sales (capital gains), regular interest, and in some cases ‘carried interest’. Under the Ryan Roadmap all of that would be 100% tax free as would passing it on to your heirs. In turn that would mean that all inheritors and their heirs in turn could if they choose live their whole lives without paying a penny in federal taxes, as distributions from their trust funds would all come in the form of dividends, asset sales, and interest. And of course they would get full enjoyment of all real and personal property accumulated: mansions, art collections, yachts, jewelry, after a couple of generations even the Queen of England might get jealous of all your swag.

This isn’t a deficit reduction plan, this is a Randian wet dream that would reward the ‘Producers’ (here defined as the Trustafarian class living off of grandpa’s wealth) at the total expense of the ‘Parasites’ (that is though people actually contributing to future productivity via labor). This is what passes for ‘serious’, for ‘intellectual’, for ‘courageous’ in the Republican Party today. BOLD ENOUGH TO GIVE 100% TAX BREAKS TO BILLIONAIRES.

Note that there is no hint of this in the WaPo article. Now I might have just let this WaPo article pass as being, after all old news, except this Ryan worship seems to be coming a trend. Because CNN followed up with this puff piece this morning A Young Republican With a Sweeping Agenda

In this highly charged election season with both houses of Congress at stake, not a lot of politicians are lining up publicly behind Mr. Ryan. He is, nonetheless, suddenly a rising star in some corners. And like many other politicians whose ideas were once considered extreme, only to later be mainstream — like Ronald Reagan — Mr. Ryan is seen as on the leading edge of something.

Why? His “Roadmap for America’s Future,” an elaborate (critics say drastic) plan that aims to erase the federal debt by 2063, simplify the tax code and significantly alter (his critics say eviscerate) Medicare and Social Security. When asked to handicap the 2012 Republican presidential field, Sarah Palin called Mr. Ryan “sharp.” Newt Gingrich dubbed him “extraordinarily formidable.” And, in a column, George Will imagined him as vice president to a President Mitch Daniels (now the Republican governor of Indiana).

Mr. Ryan, 40 and the ranking Republican on the House budget committee, has been in Congress 12 years, but it may have been President Obama who gave him and his Roadmap the broadest attention yet. This year, Mr. Obama alluded to the plan as a “serious proposal,” though the White House promptly made it clear that it had problems with its details.

Just kill me now. This plan that proposes to cut almost all taxation on capital, and all taxation on individual holders of capital, is billed as ‘simplification’, as something that in time might be seen as ‘mainstream’, that even Obama is willing to dub a ‘serious proposal’ although he might have some ‘problems with its details’. Ya think? Anyone want to calculate the cost of THIS proposal over the Infinite Future Horizon?

No one who had read through this plan and thought through the implications could take it seriously.Many people in the major media and in the Beltway take it seriously.

Well it doesn’t take a lot of logical chops to complete this syllogism and draw the right conclusion. These people are fundamentally not serious, in large part because they know that the American people as a whole are not likely to hold them accountable for not doing their homework. Or maybe one of our crack commenters can explain how you describe a plan to slash trillions in tax on capital still can be scored as solving the long-term budget crisis. You can start with the CBO score of the Roadmap. CBO: Letter to Congressman Ryan. Why didn’t CBO notice and score the huge hold the Roadmap would blow in future revenue. Simple, they were instructed to ignore it (bolding mine) .

Other Tax Provisions. The proposal would make significant changes to the tax system. However, as specified by your staff, for this analysis total federal tax revenues are assumed to equal those under CBO’s alternative fiscal scenario (which is one interpretation of what it would mean to continue current fiscal policy) until they reach 19 percent of gross domestic product (GDP) in 2030, and to remain at that share of GDP thereafter.

Although in truth it is not all just supply-side fairy dust, because the plan does raise some significant revenue. By putting new taxes on labor.

The Roadmap would also eliminate the income and payroll tax exclusions for employment-based health insurance. As a result, more earnings would become taxable for Social Security purposes, thus boosting future benefit payments, and payroll tax revenues credited to the Social Security trust funds would increase.

Yep, even if you don’t earn enough to actually be exposed to income tax, you get to pay a payroll sur-tax from the first dollar on the value of your employer supplied health insurance (if any). The implications of this would require a post of their own.

Ryan Roadmap: Cut taxes on the rich, increase taxes on the poor. Now that is tax simplification we can all believe in! (Not).

Comments (42)

Not sure why the fixation on the Ryan Roadmap. It has about as much chance of enactment as my chances of ever flying the Space Shuttle…

Islam will change

Bruce Webb

August 3, 2010 1:05 pm

Buff that is your response to everything. But the people who form elite opinion in this country, in this case the Washington Post and CNN are taking it seriously and so by all accounts are people who are pretty damn important (Obama “serious proposal”) or who hope to be (Palin “sharp”, Newt “extraordinarily formidable”, George Will ‘vice president’).

Right out of the box the provision of tax law that allows hedge fund millionaires to take their fees in he form of “carried interest” should have seemed ridiculous de novo with about as much chance of enactment as whatever but here we are with billionaires paying tax at a 15% rate. And space shuttle aside George Steinbrenner’s heirs really did just inherit their hundreds of millions tax free because Dad popped off this year and you can bet everything you own that if Republicans regain total power in 2012 they will be right back advocating elimination of the ‘death tax’ and replacement of all corporate tax by some kind of VAT. Ryan just proposes to sneak the whole thing through under the cover of deficit reduction. Remember that under the rules that set up the Catfood Commission any Senate approved package has to be voted up or down with no amendments by the House. And if you don’t think the Senate will allow tax cuts for billionaires to be part of that package you haven’t been paying attention since 1980. Nixon Commerce Secretary Peter G Peterson, in between stints as CEO of Bell and Howell and then of CEO of Lehman Bros, paid tax on his income at 70% in 1972. Thirty five years later, and as a result in good part of his own political efforts inside and outside government, he was paying taxes at 15%. Which kind of puts paid to the “as much chance” argument. Because who exactly saw that one coming in 1972?

There is a tendency to give credit for blocking the Bush Privatization Plan to Congress, but in reality no legislative proposal ever actually made it to Congress and Congress as a whole was pretty passive throughout the Spring and Summer of 2005 as “There is No Crisis” was raging. The plan didn’t get traction because folk like Marshall and Atrios in part relying on materials supplied by people like Lee A Arnold and a guy named Webb took all the air out of the balloon. In retrospect maybe that failure just seems obvious and inevitable, well it certainly didn’t feel like that at the time for those of us on the front lines.

buffpilot

August 3, 2010 2:36 pm

Bruce,

Last I checked their are 60 D Senators and a 60+ margin (?) for the Dems in the house. Plus Obama. So anything that happens here will be with the full agreement of the Dems. 2012 is a LONG way off in political terms (as you well know) so call me when Ryan’s party, the Reps, actually have some power to to anything about it.

The idea that Marshall or Atrios had any ability to stop the Bush half-hearted SS inititative is fantasy. Bush folded when there was obviously no point in even sending a bill forward – something that happens all the time. There was more pushback on the Iraq invasion and that went off with huge bi-partisan support which continues to this day.

If your making the argument that there is little difference between parties, I might go with that on this subject. Both are led and funded by millionares and billionares.

1. When you put money in the bank (save), that money does not funnel directly into business investments (stocks, bonds, etc.). At the moment it’s almost all sitting in bank reserves earning free interest from the Fed.

2. Investing in companies is not really “investing,” especially not now, with corporations sitting on their biggest cash hoards (by any measure) in history.

“Investment spending,” a term of art and defined term that is part of GDP and aggregate demand, means capital spending on long-term assets — plants, equipment, software. Also think training and inventory.

So (made-up numbers for illustration only) you put $100 in the bank. $50 is “invested” in stocks and bonds. $25 of that is “invested” in plants, equipment, etc.

I think the current numbers are *far* lower than those, but you get the picture.

terry

August 3, 2010 3:27 pm

I am with you Bruce. I would call Ryan a dolt, but you have to figure he intends the results of what he proposes which makes him a sociopath. The most amazing thing is that when he was first elected, his district was a swing district with a lot of union, blue collar workers. Most of the unions are gone as are the blue collar jobs in no small part because of policies that Ryan endorsed and he is now in a safe district for the GOP

Jimi

August 3, 2010 3:34 pm

Bruce,

“Considering that just about everyone would get a tax cut under the new system why even have this provision in?”

If, as you claim almost everybody would get a tax cut, and as Ryan claims revenues increase, doesn’t that expose the superor nature of Ryan’s plan?

Also, just because the Capital Gains, Interest, and Dividends are cut to zero, doesn’t mean those money’s are not already taxed. They were taxed under the umbrella 25% rate, and eliminate the double tax which promotes saving?

Also, as Joe Biden likes to say, shouldn’t everybody have “skin in the game?” Why is it not exceptable to tax the lower end at 10%? What is preventing the culture from voting for people who refuse to tax them while they increase spending? If everybody has “skin in the game” maybe they would ask some questions on whether or not Nancy Pelosi deserves her own Boeing 757 to fly her and her ilk in non-stop luxury.

Have you ever done any research on the flat tax? I can’t remember exactly at what tax rate produced to same amount of revenue as our current tax structure, but I remember it is quite low…something like 15% maybe less?

kharris

August 3, 2010 4:01 pm

Well, we’d expect Jimi to trot out the “skin in the game” tax-everybody argument. I’d review responses to the notion that taxes are the only “stake” that citizens have in their country, but I have to assume at this point there is no need. Jimi has had the chance to see those responses, and is pretending they don’t exist. Others have had the chance to see reasoned responses, as well, and have formed their own opinions.

As to Ryan-lionization, well that’s how you test out potential leaders. Consultants and people who comment on blogs like to pretend they have all the answers, but they don’t. If fact, life and politics are full of surprises. Knowing that outrageous nonsense has a firmly established place in right-wing politics, Ryan is staking out “outrageous nonsense” as his turf. If he can get enough attention over a long enough time, then “outrageous nonsense” will be the platform at a GOP national convention sometime in the next decade. It may not be Ryan who leads the party. Jack Kemp never did win that nomination, ya know.

I see little evidence that sociopathy is a bar to political success. How else do you explain Shrub? Just to note a recent example, take extended jobless benefits. Small millions of households had their income lowered – in some cases, probably eliminated – so that some Congress critters could pretend that making people miserable while damaging the economy served the national interest. If some behavior seems to pay off, somebody will try it. Sociopathy need not be congenital. If the rewards are great enough, Skinner takes over.

Let’s not forget that the GOP has long had the habit of creating a new “middle ground” by offering extreme positions on the right. Somehow, US politics seem to foster a small-minded faith in the middle ground, however it is created. Ryan’s extremism is not a vice in the GOP. It’s a tradition. He may never be the center of the GOP, but I’m betting he’ll have a nice, cozy spot as a leader of the disingenuous extreme, well regarded by his own followers, and those who occupy the newly “middle ground” that his extremism helps create.

Bruce Webb

August 3, 2010 4:04 pm

Jimi first of all under this plan they were not taxed under that 25% rate, not if they were themselves the result of previous capital gains. If you inherit $1 million free of estate tax and invest it in mutual funds you will never under the Roadmap pay a penny in tax on subsequent dividends. Equally if you are granted a restricted stock option I don’t believe you pay any tax even on the initial value and under the Ryan Plan certainly wouldn’t pay on the gain when you exercised it.

That Ryan “claims revenues increase” doesn’t make it true. This is particularly true since his staff insisted that CBO not score that part of the plan, which makes it suspicious on its face. Supply siders have spent the last 30 years practicing what the elder Bush called “voodoo economics”, that doesn’t make it revealed truth to anyone else. That you see an unsubstantiated claim as proof of “the superior nature or Ryan’s plan” says more about you than you know.

The lower 10% already pay tax on their wages. It is always amazing that the same people who claim that the lower 50% don’t pay taxes when looking backwards are perfectly happy seeing those revenues as just part of general taxation when looking forwards and arguing for “shared sacrifice”.

Flat tax is based on the same sort of voodoo economics as the Ryan Roadmap. Once again I don’t equate Steve Forbes’ claims as to its effectiveness as the equivalent of the Word of God. Snake Oil salesmen always claim that their product will work as advertised.

Terr

August 3, 2010 4:05 pm

Jimi: Your post confuses me greatly. “Superior nature?” WTF?

You seem to be quoting Bruce talking about how “people would have less taxes”, and then completely ignore Bruce’s immediately next sentence explaining why it means Ryan’s revenue projections are bogus.

Bruce Webb

August 3, 2010 4:21 pm

To repeat. The danger is that some or all of the Ryan Roadmap will get swept up in the unified proposal of the Catfood/Deficit Commission and come to the Senate with the endorsement of Obama and the votes of the three Dem Senator Commissioners with the understanding/requirement that the proposal be subjected to an up or down vote.

You are right that none of this advances without Obama. On the other hand that is the same Obama that didn’t burst out laughing when he read the Ryan Roadmap, instead dubbing it “a serious proposal”.

But really the point of my post was not to do a Paul Revere “The British are Coming” but to point out the true radicalness of the GOP agenda. The Ranking Member of the House Budget Committee is a Randite Fanboy who believes that capital simply should not be taxed on anything except whatever materials were consumed during the production process (or maybe someone can explain a “business consumption tax” in some other terms). That George Will and the President of the United States hold this guy up as some sort of political intellectual is to me appalling and worth the time for a little call out at AB.

Do I believe the Roadmap will come to pass in its entirety? Well no. But then I never expected people to believe that you can effectively deliver chemical weapons on balsa wood drones or culture biological weapons on moving, unrefridgerated, canvas sided trucks on Iraqi roads in an Iraqi summer. Once burned, twice shy.

buffpilot

August 3, 2010 6:08 pm

Bruce,

Well I burst out laughing and didn’t even finish it. There is a point when things are just over the tops nuts – see Kucinitch’s plans from the left. I just don’t give much of anything to a junior senator from the minority party…

And I’m sorry for being snarky. I noticed that Ryan seems to be everywhere on the left blogosphere and somewhat on the right after my first post.

But the real problem here still comes back to the ‘catfood’ commission which Obama selected or approved of and what they do. The Dems are in charge now. I can piss into the wind until I’m empty but won’t get anywhere. So can all the Reps. At best the R’s in the Senate my slow/stop something, but they sure as anything can’t actually make things happen. That’s all the Dems and Obama. You voted for this….

BTW, who came up with the ‘catfood commission’ name? I love it! Perfect branding. Makes me smile everytime I see it..

Islam will change

buffpilot

August 3, 2010 6:10 pm

oops, Ryan is not even a Senator – just another flunky Rep??

Why are we taking him seriously again? Oh that’s right – becuase Obama the Dem President of the United States is!

Who is the fool?

Bruce Webb

August 3, 2010 6:17 pm

Jimi can you give a page and para cite for that? Cause I don’t see it and i read through it twice today.

Other Tax Provisions. The proposal would make significant changes to the tax

system.2 However, as specified by your staff, for this analysis total federal tax revenues

are assumed to equal those under CBO’s alternative fiscal scenario (which is one inter-

pretation of what it would mean to continue current fiscal policy) until they reach

19 percent of gross domestic product (GDP) in 2030, and to remain at that share of

GDP thereafter.

That is not a ‘basic scoring’, that is no scoring at all. The ’2′ refers to this footnote.

2. The proposal would offer individuals the choice of paying their income taxes under the existing

tax code or a highly simplified tax system. The simplified system would broaden the tax base, com-

press the tax schedule down to two rates, and retain a standard deduction and personal exemption.

No tax would apply to capital gains, dividends, or interest. No alternative minimum tax or estate

tax would exist. Taxpayers would pay 10 percent on earnings up to $100,000 for joint filers

($50,000 for single filers) and 25 percent on earnings above that amount. The standard deduction

would be $25,000 for joint filers ($12,500 for single filers), and the personal exemption would be

$3,500. The corporate income tax would be replaced with a broad-based business consumption

tax of 8.5 percent. New business investment could be immediately expensed. Payroll taxes, excise

taxes, customs duties, and other miscellaneous receipts would be maintained.

I see no claim or score that low income taxpayers fare better under the current system. Can you spell it out.

Those two quotes are from page 4. On page 5 we add this:

The analysis in this letter does not represent a cost estimate for your proposal. Produc-

ing such an estimate would require a more detailed analysis of the Roadmap’s many

provisions, rather than the fairly mechanical extrapolations that underlie most of the

10-year budget projection period, because the uncertainties about the budgetary

effects of legislation (especially regarding health care) are simply too great beyond that

span. In contrast, this analysis uses a 75-year horizon to offer a rough assessment of

long-term trends under different policies. Even this rough comparison can be [...]

buffpilot

August 3, 2010 6:18 pm

Jimi,

I’m pretty much a small gov guy. But 1) we need taxes to fund it and everything it must do and 2) A flat tax is just plain dumb for the simple reason that there is a substantial difference in what you spend money on between someone making $30K vs $300K. People who are richer should pay more. We can argue about how much more, rates, income v.s capital gains, size of Gov that actaully needs funding, etc etc.

But taxes are necessary to fund, whatever “we” decide we want out of the Gov., and you get the money from where you can. I just think the ‘soak the rich” crap never actually does so. Just prevents people from becoming rich (and making a permanent overclass – which we are getting to anyway).

So dump the flat tax crap.

Islam will change

Bruce Webb

August 3, 2010 6:19 pm

Finally on pg. 22.

“CBO did not model tax revenues explicitly. Instead, Congressman Ryan’s staff specified that total federal tax revenues would follow revenues in the alternative fiscal scenario until they reached 19 percent of GDP in 2030 and would remain at that level thereafter.”

That is not a basic score either. It is hard to take you seriously when you just make shit up and back it by a blind citation.

Jimi

August 3, 2010 6:25 pm

I disagree with Bruce.

The CBO does not do revenue scoring, and the Joint Committee on Taxation does, but it only provides scores over a ten-year window, and that can never represent Ryan’s Plan accurately.

Ryan says that economic projections have worsened since the roadmap was conceived, which likely explains some of the revenue gap. But he also says that his projections were developed in conjunction with the Treasury Department and other tax experts. In any case, he asserts his willingness to adjust tax rates in order to hit his revenue targets, if necessary.

“If you inherit $1 million free of estate tax and invest it in mutual funds you will never under the Roadmap pay a penny in tax on subsequent dividends.’Why does that matter? There is more to the plan than Class Warfare!

“This is particularly true since his staff insisted that CBO not score that part of the plan, which makes it suspicious on its face.”The CBO does not do revenue scoring, and the Joint Committee on Taxation does, but it only provides scores over a ten-year window, and that can never represent Ryan’s Plan accurately. “That you see an unsubstantiated claim as proof of “the superior nature or Ryan’s plan” says more about you than you know.”

The Ryan plan is based on keeping tax revenue around the trend line of 18%-20% of GDP, if we could do that by giving me a tax cut, then it is superior in my opinion. It is about perspective. Those of us that are not fighting a Class War, don’t feel it necessary to tax people because we are jealous.“The lower 10% already pay tax on their wages.”

First of all I said, “tax the lowered at 10%.” Not tax the lower 10%. Anyway……

During 2006, Tax Foundation economists estimate that roughly 43.4 million tax returns, representing 91 million individuals, will face a zero or negative tax liability. That’s out of a total of 136 million federal tax returns that will be filed. Adding to this figure the 15 million households and individuals who file no tax return at all, roughly 121 million Americans—or 41 percent of the U.S. population—will be completely outside the federal income tax system in 2006. This total includes those who pay no tax, and those who pay some tax upfront and are later refunded the full amount of the tax paid or more.

It seems to me that your not interested in any real plan on fixing America’s economic difficulties. You like many others have a one track mind….Class Warfare!

“Fairness for all equals Freedom for nobody”-Jimi

Bruce Webb

August 3, 2010 6:37 pm

BTW it is not CBO’s job to make judgements about the political motivations of the Congressmen who request these evaluations of proposed legislation, but I have read a fair amount of CBO letters and reports since the first discussion of the stimulus bills and then HCR and I don’t recall another comparable example where so much is explicitly caveated as not actually being based on CBO work product. You can practically see the staff holding their noses as they sent this to the printer.

Jimi

August 3, 2010 7:20 pm

Buff,

Yes I agree, I’m not a Flat Tax guy, but I was pointing it out because it demonstrates that revenues can be increased without just “soaking the rich.”

Also, the left never wants to talk spending in the same conversation as taxes, and they never want to except that human behavior is effected by tax and spend policies (i.e. those who do not pay taxes, but rely on government to survive, will only vote to continue or increase that behavior, and those who pay the majority of the tax bill adjust their spending/cheating and will only vote for those who decrease government intervention)

Jimi

August 3, 2010 7:38 pm

Bruce,

It’s not a blind citation, because no citation is required. The current tax structure does not tax the lower end 41% of the population, and the Ryan plan does, that’s why I beleive he left that option in his plan, so that the CBO would score it to “equal those under CBO’s alternative fiscal scenario.”

“It is not a ‘basic score’ if the tax growth figures are supplied by Ryan’s staff.”The Ryan plan comes from the perspective of maintaining revenues at around 19% of GDP. Ryan said that because the situation is different now, then when they first figured it, that the percentage of the income tax rate may need to be adjusted to meet that requirement. The point is, the entirety of the plan is a focus on spending, instead of leaving spending as is, and then trying to increase taxes to compensate.The letter from the CBO is just saying that for them to score the proposal, they need to assume revenues that they expect on our current path, instead of trying to score Ryan’s revenues in the future, and then scoring the plan with those revenues, and it looks like to me, that Ryan’s people said fine “proceed.” It is my mistake to claim a “basic scoring”, and I deleted that comment, because it implies that the CBO scored the change in revenue of Ryan’s plan.

Bruce Webb

August 3, 2010 7:39 pm

Ryan is the Ranking Member on the House Budget Committee, if Republicans take control of the House next year he will be the Chairman of House Budget. He is not exactly a nobody even in these days of Senate Republican obstructionism.

Bruce Webb

August 3, 2010 7:45 pm

Thanks Guy. I meant to chase down the CBPP analysis and you saved me some time.

“The letter from the CBO is just saying that for them to score the proposal, they need to assume revenues that they expect on our current path, instead of trying to score Ryan’s revenues in the future, and then scoring the plan with those revenues, and it looks like to me, that Ryan’s people said fine “proceed.” “

Bullshit. You can’t get from the language I quoted to your conclusion. CBO made it clear that they didn’t score the revenue not because they couldn’t in principle or because of a jurisdictional conflict with JCT (which doesn’t do 75 year scoring either) because they do such scoring in their Long Term Budget Outlook AND their Long Term Projection for Social Security each year but because they were operating under specific constraints imposed by Ryan’s staff. And yes it is a ‘blind citation’ because you didn’t then or now point out specific language in it that supports your interpretation. And what part of “specified” and “provided” don’t you understand? There is nothing in the letter to suggest that the role of Ryan’s staff was simply to assent to CBO’s by saying “proceed”. Instead they clearly established the parameters.

“the entirety of the plan is a focus on spending”WTF? The proposal to change the entire structure of the tax brackets and to exempt capital gains, interest and dividends from taxation even as no details of any spending cuts beyond slashing growth rates in entitlements makes this a “focus on spending”. Christ who taught your course in textual analysis? Professor Pinocchio?

From CBO “The Roadmap would freeze all nondefense discretionary outlays unrelated to stimulus at their 2009 levels for 10 years.”That is a fricking spending plan? No increases to Homeland Security? No adjustment for inflation for the U.S. Court system? This is a “cut taxes now, we’ll figure out the spending part later” plan. Which is pretty much par for the course for the whole Republican agenda since Bush spent the whole surplus three times over by claiming he could continue to cut taxes, pay down the debt and increase spending all out of the same pot of money, a trick Krugman pointed out at the time.

Back to you: “The current tax structure does not tax the lower end 41% of the population, and the Ryan plan does”Got numbers to support that? Because at least for those without employer paid health insurance (which much of the lower 41% does not receive) it would seem that most of them would be exempt from tax by the expanded standard and personal exemptions. From the Roadmap website;“Also includes a generous standard deduction and personal exemption (totaling $39,000 for a family of four)”

There might be some in that lower 41% who would benefit from staying in the old system, but establishing that that was the reason for the dual system would require some numbers backed by evidence.

And BTW it is kind of chickenshit to delete your own comment rather than replying to it with a correction, but hey do what you want with your own content.

Bruce Webb

August 3, 2010 8:38 pm

“If you inherit $1 million free of estate tax and invest it in mutual funds you will never under the Roadmap pay a penny in tax on subsequent dividends.’Why does that matter? There is more to the plan than Class Warfare!

Says you, personally I don’t see it. And the quote from me was a response to your claim that any tax on investment returns was double taxation. I simply cite a counter example.

If you want to tax shelter 401k’s that were funded by deductions from wages in much the same way as we shelter the overwhelming majority of estates from estate taxes under current law then fine, my point is that slipping in a total tax exemption for billionaires and their heirs under cover of that typical 401k or the mythical small business lost to estate tax is straight out bait-and-switch. Sorry dude Bush let the cat out of the bag before he was elected when he thought no one was listening.http://www.cbsnews.com/stories/2000/10/18/politics/main242210.shtml

“Bush gazed around the diamond-studded $800-a-plate crowd and commented on the wealth on display.

“This is an impressive crowd – the haves and the have-mores,” quipped the GOP standard-bearer. “Some people call you the elites; I call you my base.”

He wasn’t joking, of if so the joke was on people outside the room for whom $800 is rent money and not a plate of salmon or tricked up beef.

With the possible exception of Schakovsky who is an Illinois ally of Obama as well as being close to Pelosi these 12 are not in any sense hand-picked by Obama, clearly the respective leadership called the shots and stuck closely to jurisdiction and seniority within those caucuses.

Bruce Webb

August 3, 2010 9:04 pm

“BTW, who came up with the ‘catfood commission’ name?”

Well that is lost in the midst of time, in this case Internet time which means sometime the week before last. But the most likely candidate is dday/David Dayen who splits time as a front poster on Digby and FireDogLake followed closely by Jane Hamsher the litter mistress of the FirePups at FireDogLake. But in any event even the top policy people on the pro-Social Security side in DC and elsewhere have adopted it, or if they don’t use it themselves know what we are talking about.

Jeffrey Henderson

August 3, 2010 9:52 pm

How about a 0% tax for all income? I recall slavery being abolished in this country some time ago.

Jim Hannan

August 3, 2010 9:54 pm

Josh Marshall was absolutely essential to killing the Social Security privatization scheme in 2005. He made every Democrat in Congress take a stand, and was relentless in pursuing those that were trying to play cute.

Bruce Webb

August 3, 2010 10:09 pm

Somalia, is that way. And Chad just a bit to the Northwest of that. Gosh there are plenty of places were the incidence of tax on income is zero.

Course the personal bodyguards and armored cars don’t come free. Cause in those places ‘Live free or die’ kind of merges into ‘Live free and die’ for most of the local libertarians.

Or do you think we can finance all government services AND a world-wide military presence on tariffs?

Lyle

August 3, 2010 10:43 pm

There has been much talk in the past about a tax based on consumption, essentially the amount spent during a year. Assuming such a system then re-invested dividends and cap gains would be not taxed at the time there are realized, but if the money was taken out of the account and spent. The estate tax would then be modified to make all these gains payable at that time (with a 10 year payout for closely held small businesses, to avoid forced sales). So everyone would in the end pay a tax on the investment returns either when the spend them or before passing them on. (Except to a charity as now, if the estate tax returns the best thing to do to a 401k is to donate it to charity as likley get to keep otherwise 35% between the estate tax and the income tax on income in respect of deceedent. The charity gets to keep 100%). In essenece then treat all investment accounts as if the were 401ks with a mod to make the taxes payable on taking the money out or passing it on.

ilsm

August 3, 2010 10:55 pm

Beat the gold plated spears into plough shares.

The discretionary spending of the US is 40% of federal outlays, more than half of it for an empire’s security that takes goods away from the masses.

In the United Kingdom, whose empire bankrupted it in the 1930′s, they pay 7% of exchequer spending on their defence.

The rest of the OEDC is similarly light on waste in discretionary empire security.

Why not cut discretionary spending?

The empire is not paying for itslef.

ilsm will not change.

Tao Jonesing

August 3, 2010 11:21 pm

Slightly off-topic:

Why not reframe the discussion from “Obama does not want to extend the Bush Tax Cuts” to “the GOP wants to repeal the Bush/GOP Tax Increase?”The new Fred Thomson commercial in support of “extending” admits that the taxes automatically increase. Why not lay that automatic tax increase at the feet of its creators? Obama is much more likely to get what he says he wants if triangulates from this point than from where he currently is.–TJ

Joe the Banker

August 4, 2010 3:52 am

Just end all deductions, period. Cut the tax bracket to three and lower the overall rate. More people need to pay taxes, not fewer people need to pay more taxes. Add a VAT. Raise gas tax and property tax. Even the poor and illegal pay their fair share.

Tax church and charities too. Their social benefit is never questioned. The US dilutes charity.

Greg

August 4, 2010 5:53 am

“ I just think the ‘soak the rich” crap never actually does so. Just prevents people from becoming rich (and making a permanent overclass – which we are getting to anyway). “

When, since the inception of the USA,have people been prevented from getting rich? We’ve had upper tax rates of 90%, was that a deterrent to people becoming rich? I think not.

You might be right that we are getting to a permanent overclass but this has been more a result of the Reagan revolution. One of the best ways to get a permanent overclass is to let mommy and daddy pass all their wealth and power to their spoiled little brat son and so on down the line. It can be pretty oppressing to have to answer to the same corporate families generation after generation as it can political families like the Bush, Clinton and Kennedys. Come to think of it you probably cant have one without the other.

ilsm

August 4, 2010 6:53 am

Including the percent of the population who are children living in poverty.

ilsm

August 4, 2010 6:55 am

Cut the 40% of US G spending on a shadow command economy to ZERO.

Then simplify taxes.

Corporate welfare and empire are not necessary.

Aunt Deb

August 4, 2010 10:18 am

Bruce, I want to take the opportunity to thank you for all the hard work you do on Social Security issues and for having taken the time and effort to read the Ryan proposal so closely. This is important work and I am always grateful to Angry Bear for providing you and the other posters here the platform to explain and expound.

Now, I would like to say regarding jimi’s efforts in the comments to your post that I am baffled by this bit:

Also, the left never wants to talk spending in the same conversation as taxes, and they never want to except that human behavior is effected by tax and spend policies (i.e. those who do not pay taxes, but rely on government to survive, will only vote to continue or increase that behavior, and those who pay the majority of the tax bill adjust their spending/cheating and will only vote for those who decrease government intervention)It seems to me that there are many on the right who refuse to address the effects of current tax policy and government spending on those corporations, CEOs, military contractors, pharmaceutical operations, and billionaires, effects that, shall we admit for once, include the mighty efforts to continue their favored position with regard to tax policy and government spending? I have to say I can’t see any real logical point in describing this as ‘human behavior’. Is government to be defined by the lowest common denominator, even when that definition makes some people incredibly wealthy and others intractably poor? And are we to accept this outcome simply because of ‘human behavior’?

kharris

August 4, 2010 10:36 am

Joe,

Nice statement of personal belief, worth exactly one vote during elections and less than that in between. You haven’t told us why you think people living hand to mouth should be taxed more, while those whose living standards are the highest in the history of the world should not be taxed more. Why? And, in we are insisting that everybody pay their “fair” share, I volunteer to decide what is fair. I think those who have gained least by their participation in our society should get a break, while those who benefit most from their own participation and that of others should pay more. That sounds fair to me. Of course, I’m just one vote…but that’s why I really don’t care what your personal belief about taxation may be. Everybody has personal preferences. What’s your reason?

Jack

August 4, 2010 11:04 am

The potential damage done by some one like Paul Ryan with his extreme contributions to the discussion is that the entire discussion is then shifted, even if only slightly, towards that extreme. It is all part of the so-called negotiations which take place in a “civil democracy” though the results are likely to serve only the most minute, but powerful, sector of the people who make up that democracy. That is the purpose of the Ryans in our government and the distortionists in the media.

Take the use of the term left wing as an example. Who in our Congress, or even those amongst the general political analyst corps, has seriously suggested government ownership of industry. Yes, we can always point to government participation to some extent in the conduct of public services, but ownership is not generally the case. The most recent exceptions to that general description is our government “investing” in the failed activities of the very wealthy so as to save their sorry asses from financial ruin. The one most successful government controlled program is Social Security, and that program is under constant attack for no valid reason.

Jack

August 4, 2010 11:20 am

Deb,First, Jimi almost never has any valid argument and contributes only talking points from the reactionary, no government is good government, point of view. Better that you simply make your own points rather than contradict or even only address those jimi offers.

kharris,Exactly!! Rarely will you ever see the point made on any side of the aisle that the wealthiest amongst us have benefited to a far greater extent from our government’s activities and, therefore, should bear the far greater share of the cost of fundiing that government that serves them so well. The difference in benefit is exponential while the difference in shared burden is minor.

And regarding the canard of left and right policies in this country I repeat myself from my response to buffpiloit, above:

Take the use of the term left wing as an example. Who in our Congress, or even those amongst the general political analyst corps, has seriously suggested government ownership of industry. Yes, we can always point to government participation to some extent in the conduct of public services, but ownership is not generally the case. The most recent exceptions to that general description is our government “investing” in the failed activities of the very wealthy so as to save their sorry asses from financial ruin. The one most successful government controlled program is Social Security, and that program is under constant attack for no valid reason.

Jimi

August 4, 2010 1:02 pm

Bruce,

“Other Tax Provisions. The proposal would make significant changes to the tax system.2 However, as specified by your staff, for this analysis total federal tax revenues are assumed to equal those under CBO’s alternative fiscal scenario (which is one interpretation of what it would mean to continue current fiscal policy) until they reach 19 percent of gross domestic product (GDP) in 2030, and to remain at that share of GDP thereafter.”

No….your full of shit…..It clearly states that the analysis is based on CBO’s current projections. The “specified by your staff” is an irrelevant comment to the analysis. If CBO’s can base the analysis on Ryan’s revenues then what exactly would they base the analysis on?….probably the CBO’s alternative fiscal scenario?

Ryan’s comment basically is claiming that the 10%-25% structure is not the point of the plan, it is adjustable based on the 19% of GDP.

And again,

During 2006, Tax Foundation economists estimate that roughly 43.4 million tax returns, representing 91 million individuals, will face a zero or negative tax liability. That’s out of a total of 136 million federal tax returns that will be filed. Adding to this figure the 15 million households and individuals who file no tax return at all, roughly 121 million Americans—or 41 percent of the U.S. population—will be completely outside the federal income tax system in 2006. This total includes those who pay no tax, and those who pay some tax upfront and are later refunded the full amount of the tax paid or more.

Of course, the situation is much worse now with the economic/employment enviornment we have.

“The proposal to change the entire structure of the tax brackets and to exempt capital gains, interest and dividends from taxation even as no details of any spending cuts beyond slashing growth rates in entitlements makes this a “focus on spending”. Bruce….you have got to be kidding me. The change to the tax structure is only one small part of the plan. Medicare, Social Security, Health Care Insurance are all part of the same plan.

“And BTW it is kind of chickenshit to delete your own comment rather than replying to it with a correction, but hey do what you want with your own content.”

Bruce, the comment was deleted within thirty seconds of when I pushed the “Post” button. I was not satified with it, so I wanted to strengthen the comment. It’s deletion has nothing to do with your response.